Don’t regulate overbooking, airline group urges feds

The industry group representing airlines around the world is urging the federal government to steer clear of regulating overbooking, a practice it says is a key driver of profitability for airlines and helps keeps airfares low.

“There is absolutely no need to regulate overbooking,” Alexandre de Juniac, director general and chief executive of the International Air Transport Association (IATA) said in an interview this week.

“This is the airlines’ position based on a long, long experience. The need for airlines to overbook in managing their seats, their revenues, is key. Otherwise they would be obliged to increase fares.”

The federal government’s sweeping transportation legislation, Bill C-49, aims to spell out exactly what rights airline passengers have and ensure that people who purchase flight tickets cannot be forced off due to overbooking. The legislation, which was unveiled in May, passed first reading in the Senate this week.

While the Transport Ministry has tasked the Canadian Transportation Agency with the responsibility of spelling out the regulations within the passenger bill of rights, Transport Minister Marc Garneau has said the new regulations will address denied boarding, specifically in cases of overbooking.

“I have been clear that regulations would include provisions whose intent would be that any denied boarding due to overbooking is done voluntarily and that under no circumstance (should) someone be involuntary removed from an aircraft after they have boarded,” Garneau said at a transportation committee meeting focusing on Bill C-49.

“As Canadians, we expect that air carriers that serve our country treat their passengers with the respect that they deserve and that they live up to their commitments.”

The practice of overbooking is crucial for airline’s operations, de Juniac said, as it allows airlines to fill their planes with the maximum amount of passengers and drive profitability. He also said that because of improved technology and algorithms, overbooking “almost never happens now.”

“In terms of preserving passenger rights and treating them well, market forces are a very strong incentive,” de Juniac said, pointing to how United Airlines stock dropped after a video showing a passenger being forcibly removed off a plane went viral.

The day after the video was seen around the world, United Continental Holdings stock dropped four per cent, wiping out nearly $1 billion of the company’s market value.

An IATA policy document on overbooking said the practice is needed to help provide consumers with competitive fares.

“Banning the practice of overbooking will reduce already-thin margins, and could reduce connectivity in turn,” the organization said.

In submissions to the Transport Committee looking at Bill C-49, the chief executive of Flight Claim Canada, a group that helps travellers file claims over airline issues, said the government should expand denied boarding to cover overbooking.